Finance
In New York, 'mortgage assumption' allows a buyer to:
AAutomatically take over any existing mortgage
BTake over the seller's existing mortgage obligation with lender approval (if the loan is assumable)✓ Correct
CNegotiate a new interest rate with the existing lender
DAvoid paying a down payment
Explanation
Mortgage assumption allows the buyer to step into the seller's shoes and take over the existing mortgage, typically with lender approval. Most conventional loans have 'due on sale' clauses that prevent assumption without lender consent, while FHA and VA loans are generally assumable.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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